Resource Star (ASX: RSL) will boost the company's uranium focused global footprint with the purchase of a strategic 17.6% stake in Cue Resource (CVE: CUE), for C$2.2 million.
Cue owns the Yuty Uranium Project in Paraguay which holds a NI43-101 compliant Indicated & Inferred Resource of; 10.1 million tonnes at 430ppm eU3O8 at the San Antonio Deposit.
The acquisition has come from Resource Star agreeing to acquire the interest in Cue from its major shareholder Red Rock Resources (LON: RRR) and Regency Mines (LON: RGM), subject to shareholder approval.
Consideration will be paid in two instalments, 40% on completion with the balance six months later.
Resource Star said the project has considerable further potential at both San Antonio and generally within the Cue concession area.
Most importantly in building the resource, Cue has expressed the intention of continuing an active exploration program.
This program will focus on the expansion of and feasibility assessment of the San Antonio Deposit, following up on encouraging initial metallurgical and permeability test work, drilling at additional prospects and expansion of exploration to the majority of concession.
Increasing the prospectivity of the concession, is that there has been little or no modern exploration.
The transaction
Under the terms of the contemplated transaction Resource Star will acquire 20,304,385 ordinary shares in Cue, for 17.6% of the issued capital, and a loan to Cue of C$0.2 million.
Resource Star will also acquire 15,798,000 warrants convertible to ordinary shares in Cue at prices between C$0.12 and C$0.15 for each Cue share, which if converted would on a fully diluted basis boost Resource Star's interest to 18.8%.
Recent exploration
Recently 3,600 metres of new drilling at San Antonio was completed, with highlights including; 2.6 metres at 500ppm eU3O8 and 2.0 metres at 1,100ppm eU3O8 outside the existing resource boundary.
Inside the resource boundary highlights included; 6.3 metres at 2,000ppm eU3O8.
In March 2011 a further 3,500 metre program was initiated at a second prospect, San Miguel, located just 10 kilometres away.
Adding to the potential, historical drilling had indicated further uranium mineralisation, with results to date confirming the areas prospectivity with intersections reported of; 13.9 metres at 330ppm eU3O8, 9 metres at 250ppm eU3O8 and 14.8 metres at 180ppm eU3O8.
Resource Star's JORC Resource project
Resource Star already holds a JORC Inferred Resource of; 7.7 million tonnes at 270ppm U3O8 for a total of 4.6 million pounds of contained metal at the Livingstonia project in Malawi.
The company currently has an Addition to Resource under review, to be followed by a Scoping Study.
Adding to the potential of the area surrounding Livingstonia, is that major miner Paladin Energy (ASX: PDN) is operating in the Kayelekera U Mine around 100 kilometres away.
In Australia, Resource Star is conducting reconnaissance on the new Pine Creek targets including follow-up drilling and airborne gpx.